London pre-open: Stocks seen lower as investors brace for first rate hike since 2007
London stocks were set for a weaker open on Thursday ahead of the latest policy announcement from the Bank of England, which is widely expected to announce the first rate hike in over a decade.
The FTSE 100 was expected to open 24 points lower at 7,464.
The BoE rate announcement is at 1200 GMT, along with the quarterly inflation report and the latest minutes.
CMC Markets analyst Michael Hewson said: "At lunch time today the Bank of England will have either raised rates for the first time since 2007, or they will have presided over the latest episode of shambolic forward guidance since Mark Carney became Governor of the Bank of England back in 2012.
"They do have previous when it comes to misleading the markets when it comes to rates, but despite the misgivings expressed by two of the newest members of the Monetary Policy Committee, David Ramsden and Job Cunliffe last month it is widely expected that the central bank will reverse the rate cut seen in August 2016 at midday today, albeit the vote is not expected to be unanimous."
Hewson said that while the extent of division on the MPC will be important, the key test will be what comes after that, which is likely to be in terms of how the bank sees the UK economy, through the prism of its latest quarterly inflation report.
Investors will also be digesting the latest policy announcement from the Federal Reserve overnight, as the US central bank stood pat on rates as expected. The Fed kept its interest rate target at between 1% and 1.25%, although its statement remained upbeat about the state of the US economy.
All eyes will be on the US again on Thursday as US President Trump is due to announce Fed Chair Janet Yellen's successor, amid expectations he will plump for Fed Governor Jerome Powell.
In corporate news, Wm Morrison said it had strong momentum for the Christmas trading period after sales rose in the third quarter. Sales at stores open a year or more, excluding fuel rose 2.5% in the 13 weeks to 29 October, the supermarket said in a trading update.
Sales and profits both declined at BT in the first half, as expected, but after facing challenges in some parts of the business, including an accounting scandal in Italy, the telecoms giant defied some doubting Thomases by maintaining its interim dividend.
Revenues in the second fell 1% to £5.95bn, adjusted earnings before interest, tax, depreciation and amortisation shrank 4% to £1.8bn and the full year outlook was said to have remained unchanged.
Randgold Resources posted a drop in profit and production for the third quarter, but said it was on track to meet its 2017 guidance.
Profit fell 41% to $602m, with production down 9% to 310,618 ounces, as total cash cost per ounce rose 17% to $667.
RSA Insurance Group reported “continued progress” in its third quarter on Wednesday, despite hurricane costs, with year-to-date group net written premiums up 8% to £5.08bn, or up 3% at constant currency.
The insurer added that earnings per share in the year-to-date were also ahead of 2016, although it was “held back” by third quarter underwriting results.